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Thursday, June 11, 2015

Legal issues - reality vs. rumor!

Greetings HHSE Friends - Two "legal" questions arose onto the chat boards today.  The purpose of this blog is to address and clarify what these issues are and what they mean.

1).  ELDER MANAGEMENT - As previously addressed, the lawsuit filed in April by Elder Management was resolved in less than 24 hours.  The attorney for Elder neglected to file the case withdrawal.  We have communicated with her (again) to please withdraw / close the action as it's been resolved.

2).  ANDERSON'S LOAN - As stated previously, the "Andersons P&A Loan" for the 2010 theatrical release of "TWELVE" is one of only two outstanding P&A loans still being carried on the books.  This is nothing new;  it's long since been known and disclosed.  The Anderson's sued HHSE four years ago (2011), and have twice (in the past) issued "levy" garnishments against the Company, usually resulting in minimal benefit to them because of the Company's practice of immediately reinvesting cash flow into new product sales. Fred Shefte has made several proposals to the attorney for the Andersons to persuade them into considering various payment structures and payment plans.  We remain perplexed at their insistence on not accepting an installment agreement, ostensibly due to a concern that accepting partial payments might somehow jeopardize the collectibililty of the total debt (which is a legal position our HHSE counsel disagrees with).  As a result of a new garnishment issued today by the Andersons against Liberty Bank, they will likely collect less than $1,000.  Last October, we offered a $40,000 payment that was not accepted; accordingly, those funds were allocated to other creditors.  The Anderson's garnishment action is a distraction, but not an issue at all impacting the Company's daily operations and activities.

We would love to structure a payment plan with the Anderson's attorney.  Perhaps now, after trying a third time via the "adversarial method" and not getting relief, the receptivity to our HHSE payment plan will be considered.

As has been often stated, HHSE immediately reinvests almost all cash flow into new release marketing and the fulfillment of orders.  We don't sit on cash, we put it immediately back to work.  Accordingly, when the attorney for a creditor doesn't want to structure a payment plan - but instead prefers to attack the windmill - the result is usually futile.  We remain hopeful that the Andersons will decide to accept a payment plan from HHSE, as we could pay off their balance in 12-to-18 months.